<PAGE>


                                                                  CONFORMED COPY

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                  ------------

                                    FORM 10-Q

             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2001
                         Commission File Number 0-23611

                                DSET CORPORATION
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

<TABLE>
<S>                                                <C>
                  New Jersey                                    22-3000022
--------------------------------------------------------------------------------------
        (State or Other Jurisdiction of            (I.R.S. Employer Identification No.)
        Incorporation or Organization)

1160 U. S. Highway 22, Bridgewater, New Jersey                     08807
--------------------------------------------------------------------------------------
    (Address of Principal Executive Offices)                    (Zip Code)
</TABLE>


                                 (908) 526-7500
                        -------------------------------
                        (Registrant's Telephone Number,
                              Including Area Code)

     Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                             Yes:   X      No:
                                  -----         -----

     Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of May 1, 2001:

<TABLE>
<CAPTION>
                      Class                  Number of Shares
            --------------------------       ----------------
            <S>                                <C>
            Common Stock, no par value           11,631,990

</TABLE>





<PAGE>


                                DSET CORPORATION

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                               Page
                                                                               ----
<S>                                                                             <C>
PART I. FINANCIAL INFORMATION ................................................   1

        Item 1. Condensed Financial Statements ...............................   1

                Condensed Consolidated Balance Sheets as of March 31, 2001 and
                     December 31, 2000 .......................................   2

                Condensed Consolidated Statements of Income (Loss) and
                     Comprehensive Income (Loss) for the Three Months Ended
                     March 31, 2001 and 2000 .................................   3

                Condensed Consolidated Statements of Cash Flows for the Three
                     Months Ended March 31, 2001 and 2000 ....................   4

                Notes to Condensed Consolidated Financial Statements .........   5

        Item 2. Management's Discussion and Analysis of Financial Condition and
                Results of Operations .........................................  13

                Results of Operations .........................................  16

                Liquidity and Capital Resources ...............................  18

        Item 3. Quantitative and Qualitative Disclosures About Market Risk ....  20

PART II. OTHER INFORMATION ....................................................  21

        Item 2. Use of Proceeds ...............................................  21

        Item 5. Other Information .............................................  22

        Item 6. Exhibits and Reports on Form 8-K ..............................  22

SIGNATURES ....................................................................  23

                                       i

</TABLE>






<PAGE>



                         PART I. FINANCIAL INFORMATION


                          Item 1. Financial Statements


                                       1





<PAGE>


DSET Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                             March 31,       December 31,
                                                                               2001             2000
                                                                            -----------      ------------
                                                                            (unaudited)       (unaudited)


<S>                                                                       <C>                   <C>
Assets
Current assets:
  Cash and cash equivalents                                               $  6,384,234     $  7,314,254
  Marketable securities                                                     19,733,617       27,760,494
  Accounts receivable, net of allowance for doubtful accounts
    of $12,725,763 and $12,285,676                                           4,894,200        6,248,635
  Income taxes receivable                                                    3,438,397        3,561,201
  Prepaid licenses                                                             854,071          766,071
  Prepaid expenses and other current assets                                  1,081,117        1,768,709
                                                                          ------------     ------------
    Total current assets                                                    36,385,636       47,419,364

Acquired technology, net                                                     4,423,597        4,380,141
Software licenses, net                                                            --          2,257,101
Software development costs, net                                                403,469          435,746
Fixed assets, net                                                            4,762,336        4,999,684
Goodwill, net                                                                  862,800          928,141
Other assets, net                                                              920,501          762,381
                                                                          ------------     ------------
    Total assets                                                          $ 47,758,339     $ 61,182,558
                                                                          ============     ============

Liabilities and Shareholders' Equity
Current liabilities:
  Accounts payable and accrued expenses                                   $  5,960,858     $  8,028,046
  Deferred revenues                                                          3,064,170        3,088,086
  Current portion of notes payable                                             837,004          872,129
  Current portion of capital lease obligation                                  138,367          138,367
                                                                          ------------     ------------
    Total current liabilities                                               10,000,399       12,126,628

Long-term notes payable                                                           --            409,901
Deferred  rent                                                                 520,486          505,264
Capital lease obligation                                                       389,135          423,304
                                                                          ------------     ------------
    Total liabilities                                                       10,910,020       13,465,097
                                                                          ------------     ------------

Commitments and contingencies

Shareholders' equity:
  Common stock, no par value; 40,000,000 shares authorized, 11,631,990
    and 11,630,115 shares issued and outstanding at March 31, 2001
    and December 31, 2000, respectively                                     50,146,240       50,169,404
  Deferred stock compensation                                                  (40,897)         (59,371)
  Accumulated deficit                                                      (13,487,616)      (2,564,554)
  Accumulated other comprehensive income                                       230,592          171,982
                                                                          ------------     ------------
    Total shareholders' equity                                              36,848,319       47,717,461
                                                                          ------------     ------------
    Total liabilities and shareholders' equity                            $ 47,758,339     $ 61,182,558
                                                                          ============     ============

</TABLE>

  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.




                                       2






<PAGE>

<TABLE>
<CAPTION>

DSET Corporation and Subsidiaries
Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
--------------------------------------------------------------------------------------

                                                             Three Months Ended March 31,
                                                             ----------------------------
                                                               2001              2000*
                                                               ----              -----
                                                            (unaudited)       (unaudited)

<S>                                                       <C>                <C>
Revenues:

  License revenues                                        $  1,521,160       $  8,095,419
  Service revenues                                           1,894,280          3,502,994
                                                          ------------       ------------

           Total revenues                                    3,415,440         11,598,413
                                                          ------------       ------------

Cost of revenues:
  License revenues                                             501,826            799,219
  Service revenues                                           1,990,663          2,235,645
                                                          ------------       ------------

           Total cost of revenues                            2,492,489          3,034,864
                                                          ------------       ------------

           Gross profit                                        922,951          8,563,549
                                                          ------------       ------------

Operating expenses:
  Sales and marketing                                        2,529,592          2,611,003
  Research and product development                           3,909,534          3,418,351
  General and administrative                                 1,852,265          1,294,500
  Bad debt expense                                             440,087             99,000
  Amortization of goodwill and other intangibles               100,117            103,284
  Restructuring and other charges                            3,428,918               --
                                                          ------------       ------------
           Total operating expenses                         12,260,513          7,526,138
                                                          ------------       ------------

           Operating (loss) income                         (11,337,562)         1,037,411

Interest expense and other income (expense)                    (46,928)           (55,299)
Interest income                                                490,265            398,434
                                                          ------------       ------------

(Loss) income before income taxes                          (10,894,225)         1,380,546

Provision  for income taxes                                     28,837            459,846
                                                          ------------       ------------

Net (loss) income                                         $(10,923,062)      $    920,700
                                                          ============       ============

Other comprehensive income (loss), net of tax
 Unrealized appreciation on investments                         56,941             97,507
 Cumulative translation adjustment                               1,669               (720)
                                                          ------------       ------------
           Comprehensive (loss) income                    $(10,864,452)      $  1,017,487
                                                          ============       ============
Net (loss) income applicable to common shares             $(10,923,062)      $    920,700
                                                          ============       ============
Net (loss) income per common share                        $      (0.94)      $       0.08
                                                          ============       ============
Weighted average number of common shares
  outstanding                                               11,631,365         11,037,458
                                                          ============       ============
Net (loss) income per common share assuming dilution      $      (0.94)      $       0.08
                                                          ============       ============
Weighted average number of common shares and
  common equivalent shares outstanding                      11,631,365         12,116,680
                                                          ============       ============

</TABLE>

* Certain amounts have been reclassified for comparative purposes.

  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.

                                       3





<PAGE>


DSET Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                      Three Months Ended March 31,
                                                                  ----------------------------------
                                                                      2001                2000*
                                                                      ----                 -----
                                                                   (unaudited)         (unaudited)
<S>                                                             <C>                      <C>
Cash flows from operating activities:
  Net (loss) income                                              $(10,923,062)      $    920,700
  Adjustments to reconcile net (loss) income to net cash
    provided by (used in) operating activities:
    Deferred income taxes                                                --             (133,616)
    Tax benefit from exercise of stock options                           --            1,775,415
    Stock based compensation charges                                   (9,227)            32,905
    Depreciation                                                      352,991            233,181
    Amortization                                                      421,964            207,199
    Loss on disposal of assets                                           --                  475
    Bad debt expense                                                  440,087             99,000
    Restructuring and other charges                                 2,895,825               --
    Changes in assets and liabilities:
      Accounts receivable, net                                        914,348          5,573,994
      Prepaid licenses                                                (88,001)          (790,000)
      Prepaid assets and other current assets                         679,992           (186,515)
      Other assets                                                   (192,895)            (9,897)
      Accounts payable and accrued expenses                        (2,148,970)           734,316
      Deferred rent                                                    15,222               --
      Income taxes payable and receivable                             122,804         (1,739,932)
      Deferred revenues                                               (23,916)         1,581,672
                                                                 ------------       ------------
        Net cash (used in) provided by operating activities        (7,542,838)         8,298,897
                                                                 ------------       ------------
Cash flows from investing activities:
  Purchases of marketable securities                                     --          (10,427,655)
  Redemption of marketable securities                               8,083,818          9,978,542
  Purchase of acquired technology                                    (347,035)              --
  Acquisition of fixed assets                                        (603,603)        (1,038,901)
                                                                 ------------       ------------
        Net cash provided by (used in) investing activities         7,133,180         (1,488,014)
                                                                 ------------       ------------
Cash flows from financing activities:
  Loans to officers and shareholders                                     --             (200,000)
  Repayments of loans from officers and shareholders                    7,600               --
  Repayments of notes payable                                        (500,000)          (528,530)
  Repayments of capital lease obligation                              (34,169)           (42,192)
  Proceeds from the exercise of stock options and warrants              4,538          1,115,693
                                                                 ------------       ------------
        Net cash (used in) provided by financing activities          (522,031)           344,971
                                                                 ------------       ------------
  Effect of foreign exchange rate changes on cash                       1,669               --
                                                                 ------------       ------------
       Net (decrease) increase in cash and cash equivalents          (930,020)         7,155,854
                                                                 ------------       ------------

  Cash and cash equivalents, beginning of period                    7,314,254          2,212,759
                                                                 ------------       ------------
  Cash and cash equivalents, end of period                       $  6,384,234       $  9,368,613
                                                                 ============       ============

Supplemental disclosure of cash flow information:
  Cash (received) paid during the period for income taxes        $   (123,933)      $    572,350
  Cash paid during the period for interest                       $     36,528       $     18,464

</TABLE>

* Certain amounts have been reclassified for comparative purposes.


  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.

                                       4




<PAGE>


DSET Corporation and Subsidiaries
March 31, 2001
Notes to Condensed Consolidated Financial Statements (unaudited)


1. Basis of Presentation

   The condensed consolidated financial information presented as of March 31,
   2001 and for the three-month periods ended March 31, 2001 and 2000 is
   unaudited, but in the opinion of DSET Corporation's ("DSET" or the "Company")
   management, contains all adjustments (consisting only of normal recurring
   adjustments) which the Company considers necessary for the fair presentation
   of the Company's financial position as of March 31, 2001 and the results of
   its operations and cash flows for the three-month periods ended March 31,
   2001 and 2000. The financial statements included herein have been prepared in
   accordance with generally accepted accounting principles and the instructions
   to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain
   information and footnote disclosures normally included in financial
   statements prepared in accordance with generally accepted accounting
   principles have been condensed or omitted. These financial statements should
   be read in conjunction with the Company's audited financial statements and
   accompanying notes and Management's Discussion and Analysis of Financial
   Condition and Results of Operations contained in the Company's Annual Report
   on Form 10-K for the year ended December 31, 2000. The December 31, 2000
   balance sheet data contained in this Form 10-Q was derived from audited
   financial statements, but does not include all disclosures required by
   generally accepted accounting principles.

   Results for the interim period are not necessarily indicative of results that
   may be expected for the entire year.

2. Summary of Significant Accounting Policies

   Consolidation

   The condensed consolidated financial statements include all wholly-owned
   subsidiaries from the respective dates of their acquisition or formation. The
   consolidated entity includes DSET Corporation and its wholly-owned
   subsidiaries, DSET Acquisition Corp., a Delaware corporation; Konark Inc.
   ("Konark"), a California corporation; PIC Technologies, Inc., a Delaware
   corporation; Chengdu DSET Science & Technology Co., Ltd. (China) (see Note
   7); and DSET Canada, Inc. (Canada). All intercompany transactions have been
   eliminated in consolidation.

   Cash and Cash Equivalents

   The Company considers all highly liquid investments purchased with an
   original maturity of three months or less to be cash equivalents.


                                       5








<PAGE>


DSET Corporation and Subsidiaries
March 31, 2001
Notes to Condensed Consolidated Financial Statements (unaudited)



   Marketable Securities

   The marketable securities held by the Company are considered to be
   available-for-sale securities and are reported at fair value. Unrealized
   appreciation was $237,000 (net of deferred taxes of $133,000) at March 31,
   2001. Cost is determined on a specific identification basis.

   Fixed Assets

   Equipment, furniture and purchased software are stated at cost less
   accumulated depreciation and amortization. Depreciation is calculated using a
   straight-line method over estimated useful lives ranging from three to seven
   years. Leasehold improvements are amortized over the lesser of the estimated
   useful life or the lease term. Gains and losses on the disposal of fixed
   assets are recognized in the Statement of Income (Loss) in the period of
   disposition.

   Goodwill

   The Company amortizes goodwill using a straight-line method over an estimated
   useful life of five years. The Company periodically assesses the
   realizability of the asset based on estimated future cash flows. Accumulated
   amortizaton was $507,000 as of March 31, 2001 and $442,000 as of December 31,
   2000.

   Software Development Costs

   Capitalization of software development costs begins on establishment of
   technological feasibility. Costs incurred prior to establishment of
   technological feasibility are charged to research and product development
   expense. The ongoing assessment of recoverability of capitalized costs
   requires considerable judgement by management with respect to certain
   factors, including the anticipated future gross revenues, estimated economic
   life and changes in technology. These factors are considered on a
   product-by-product basis. Amortization of software development costs is the
   greater amount computed using (a) the ratio that current gross revenues for a
   product bears to the total of current and anticipated future gross revenues
   for that product or (b) the straight-line method over the remaining estimated
   economic life ranging from three to five years of the product including the
   period being reported on. Accumulated amortization was approximately $242,000
   as of March 31, 2001 and $210,000 as of December 31, 2000.

   Acquired Technology

   Acquired technology represents the costs of feasible technology acquired from
   external sources. At March 31, 2001, acquired technology mainly reflects the
   purchase of certain assets of Network Programs LLC ("NPL") and Konark Inc.,
   as well as related costs to


                                       6








<PAGE>


DSET Corporation and Subsidiaries
March 31, 2001
Notes to Condensed Consolidated Financial Statements (unaudited)



   acquire such assets. Accumulated amortization was $1,380,000 as of March 31,
   2001 and $1,197,000 as of December 31, 2000. In the quarter ended March 31,
   2001, the Company purchased acquired technology of approximately $347,000 for
   technology associated with EZ911 Connector. Amortization of acquired
   technology is the greater of the amount computed using (a) the ratio that
   current gross revenues for a product bears to the total of current and
   anticipated future gross revenues for that product or (b) the straight-line
   method over the remaining estimated economic life ranging from three to five
   years of the product including the period being reported on.

   Research and Product Development

   Research and product development costs are charged to expense as incurred.
   However, the costs incurrred for the development of computer software that
   will be sold, leased, or otherwise marketed are capitalized when
   technological feasibility has been established.

   Long-Lived Assets

   The Company reviews its long-lived assets for impairment whenever events or
   changes in circumstances indicate that the carrying amount of an asset may
   not be recoverable. The Company considers historical performance and future
   estimated results in its evaluation of potential impairment and then compares
   the carrying amount of the asset to the estimated future net cash flows
   expected to result from the use of the asset. If the carrying amount of the
   asset exceeds estimated undiscounted future net cash flows, the Company
   measures the amount of the impairment by comparing the carrying amount of the
   asset to its fair value. Fair value is generally measured by discounting
   expected future net cash flows at the rate the Company utilizes to evaluate
   potential investments (see Note 7).

   Revenue Recognition

   License revenues are recorded when the software has been shipped to the
   Company's licensees and all significant obligations have been satisfied. Any
   contract holdbacks or contingent charges are recognized as revenue when they
   are satisfied. Revenues from run-time licenses are recognized as equipment
   using the Company's software is deployed by the Company's customers. Custom
   application development and gateway development service revenues are
   recognized over the period in which the service is performed based on the
   percentage of direct labor costs incurred to the total estimated direct labor
   costs.

   When the engineering of a product is not yet completed, revenue is recognized
   on orders for that product using the percentage of completion method as
   defined above. Any revenue recognized in excess of amounts invoiced to the
   customer for progress billings are recorded as unbilled accounts receivable.


                                       7








<PAGE>


DSET Corporation and Subsidiaries
March 31, 2001
Notes to Condensed Consolidated Financial Statements (unaudited)



   Service revenue from maintenance contracts is deferred and recognized over
   the term of the respective contracts (typically twelve months).

   Revenues under software arrangements involving multiple elements of a sale
   are allocated to each element based on vendor specific objective evidence of
   the value of elements.

   Income Taxes

   The Company utilizes an asset and liability approach for financial reporting
   for income taxes. Deferred income tax assets and liabilities are computed
   for differences between the financial statement and tax bases of
   assets and liabilities that will result in taxable or deductible amounts in
   the future, based on enacted tax laws and rates applicable to the period in
   which the differences are expected to affect taxable income. Valuation
   allowances are established, when necessary, to reduce the deferred tax assets
   to the amount expected to be realized.

   For certain stock options, the Company receives a tax deduction for the
   difference between the fair market value of the Company's common stock at the
   date of exercise of the stock option and the exercise price. To the extent
   the amount deducted for income taxes exceeds the amount charged to operations
   for financial statement purposes, the related tax benefits are credited to
   shareholders' equity.

   Fair Value of Financial Instruments

   The carrying amounts in the financial statements for cash and cash
   equivalents, accounts receivable, accounts payable and accrued expenses, and
   notes payable approximate their market value because of the short maturity of
   those instruments.

   Use of Estimates in the Preparation of Financial Statements

   The preparation of financial statements in conformity with generally accepted
   accounting principles requires management to make estimates and assumptions
   that affect the reported amounts of assets and liabilities and disclosure of
   contingent assets and liabilities at the date of the financial statements and
   the reported amounts of revenues and expenses during the reporting period.
   Actual results could differ from those estimates. Estimates are used when
   accounting for certain items such as the allowance for doubtful accounts,
   depreciation and amortization, future revenue streams from its products and
   income taxes. Additionally, the Company evaluates the useful lives of its
   acquired technology and software development costs based upon changes in
   technology and industry conditions.

   Reclassifications

   Certain amounts in 2000 have been reclassified to conform to the current
   period presentation.


                                       8








<PAGE>


DSET Corporation and Subsidiaries
March 31, 2001
Notes to Condensed Consolidated Financial Statements (unaudited)



   New Accounting Standards

   On June 15, 1998, the Financial Accounting Standards Board ("FASB") issued
   Statement of Financial Accounting Standards No. 133, "Accounting for
   Derivatives and Hedging Activities" ("SFAS No. 133"). SFAS No. 133 is
   effective for all fiscal quarters of all fiscal years beginning after June
   15, 2000 (January 1, 2001 for the Company). SFAS No. 133 requires that all
   derivative instruments be recorded on the balance sheet at their fair value.
   Changes in the fair value of derivatives are recorded each period in current
   earnings or other comprehensive income, depending on whether a derivative is
   designated as part of a hedge transaction and, if it is, the type of hedge
   transaction. To date the Company has not invested in derivative instruments
   and has not engaged in hedging activities. Accordingly, the adoption of SFAS
   133 did not have an impact on the Company's results of operations, cash flows
   or its financial position. In June 2000, the FASB issued Statement of
   Financial Accounting Standards No. 138, "Accounting for Certain Drivative
   Instruments and Certain Hedging Activities" ("SFAS 138"). SFAS 138 addresses
   certain issues related to the implementation of SFAS 133, but did not change
   the basic accounting model of SFAS 133.

3. Debt Obligations

   a) Capital Lease Obligation

   In June 1999, the Company entered into a five-year capital lease agreement
   mainly for office furniture and fixtures in the Company's facilities in
   Bridgewater, New Jersey and Plano, Texas at an annual rate of 8.21%. Annual
   lease payments approximate $180,000. Assets recorded under this lease are
   included in fixed assets as follows:

<TABLE>
<CAPTION>
                                              March 31, 2001          December 31, 2000
                                              --------------          -----------------
<S>                                         <C>                      <C>
Furniture and fixtures                           $ 743,462                  $ 743,462

Accumulated amortization                          (185,866)                  (159,313)
                                                 ---------                  ---------
                                                 $ 557,596                  $ 584,149
                                                 =========                  =========
</TABLE>

   b) Lines of Credit

   In August 2000, the Company renewed an unsecured revolving credit facility
   with a bank increasing the line of credit to $5 million. Borrowings under
   this line of credit bear interest at the bank's prime rate (7.50% at March
   31, 2001) less 0.25% on amounts outstanding of less than $1 million and at
   the bank's prime rate for aggregate principal amounts exceeding $1 million.
   No borrowings under this line were outstanding at March 31, 2001 or December
   31, 2000. This credit facility contains, among other provisions, a covenant
   which restricts the Company's ability to pay cash dividends. At March 31,
   2001 and December 31, 2000,


                                       9








<PAGE>


DSET Corporation and Subsidiaries
March 31, 2001
Notes to Condensed Consolidated Financial Statements (unaudited)


   the "earnings before income taxes, depreciation and amortization" ("EBITDA")
   covenant was not met. The Company has applied for a waiver of this covenant.

   c) Notes Payable

   As part of the acquisition of Konark, the Company paid $1.0 million in cash
   and issued a $2.5 million non-interest bearing note payable which has been
   discounted at 8.25%. Interest expense is accreted monthly and totalled
   $25,000 at March 31, 2001. The note is payable in five installments, and
   matures on March 1, 2002.

   As of March 31, 2001, future payments under the notes are as follows:

<TABLE>
<CAPTION>
                                       Principal
Year Ending December 31,               Payments
------------------------               ---------
<S>                               <C>
2001                                $  500,000
2002                                   500,000
                                    ----------
                                     1,000,000

Less:  Unamortized interest           (162,996)
                                    ----------
Present value of notes payable         837,004

Less:  Current portion                 837,004
                                    ----------
Long-term portion                   $        0
                                    ==========
</TABLE>



4. Revenue Concentration

   The Company had one customer accounting for 37% of revenues for the quarter
   ended March 31, 2001 and one customer which accounted for 20% of revenues
   for the quarter ended March 31, 2000. The Company had one customer
   accounting for 14% of accounts receivable, net at March 31, 2001 and one
   customer accounting for 23% of accounts receivable, net at December 31, 2000.
   The Company derives a portion of its revenues from international sales which
   constituted approximately 1.3% and 6.0% of the Company's total revenues in
   the first quarter of 2001 and 2000, respectively. International sales are
   derived from Europe (primarily Italy and Germany), and Asia (primarily Korea,
   China and Japan). The Company's international sales currently are United
   States dollar-denominated. As a result, an increase in the value of the
   United States dollar relative to foreign currencies could make the Company's
   products and services less  competitive in international markets.


                                       10








<PAGE>

DSET Corporation and Subsidiaries
March 31, 2001
Notes to Condensed Consolidated Financial Statements (unaudited)


5. Earnings Per Share

   The Company calculates, presents and discloses earnings per share ("EPS") in
   accordance with SFAS No. 128, "Earnings per Share". The statement defines two
   earnings per share calculations, basic and assuming dilution. The objective
   of basic EPS is to measure the performance of an entity over the reporting
   period by dividing net income available to common stock by the weighted
   average shares outstanding. The objective of diluted EPS is consistent with
   that of basic EPS, that is to measure the performance of an entity over the
   reporting period, while giving effect to all dilutive potential common shares
   that were outstanding during the period. The calculation of diluted EPS is
   similar to basic EPS except the denominator is increased for the conversion
   of potential common shares. No potential dilutive common shares were
   outstanding because of the Company's net loss for the three month period
   ended March 31, 2001. The following table is a reconciliation of the
   numerator and denominator under each method:


<TABLE>
<CAPTION>

                                               For the Three Months Ended March 31,
                                               ------------------------------------
                                              2001                                2000
                               ---------------------------------    -----------------------------
                                Net                   Per Share      Net                Per Share
                               Loss          Shares     Amount      Income     Shares     Amount
                               ---           ------     ------      ------     ------     ------
<S>                       <C>            <C>          <C>        <C>       <C>         <C>
Basic EPS:
Net (loss) income
applicable to
common shares               $(10,923,062)  11,631,365   $(0.94)   $920,700  11,037,458    $0.08

Assuming
dilution:

Stock options                          -            -                    -   1,036,207
Warrants                               -            -                    -      43,015
                            ------------   ----------             --------  ----------
                            $(10,923,062)  11,631,365   $(0.94)   $920,700  12,116,680    $0.08
                            ============   ==========             ========  ==========
</TABLE>


At March 31, 2001 substantially all option exercise prices exceeded the market
price of the Company's common stock. At March 31, 2001, outstanding options to
purchase 2,281,852 shares of common stock are antidilutive and excluded from the
computation of diluted loss per share at March 31, 2001.


6. Related Party Transactions


                                       11








<PAGE>


DSET Corporation and Subsidiaries
March 31, 2001
Notes to Condensed Consolidated Financial Statements (unaudited)


   During the year ended 2000, the Company extended three loans to its President
   and Chief Executive Officer totaling $902,728 with a 6% interest rate per
   annum with one due November 2000, one due May 2001 and one due October 2001.
   As of December 31, 2000, the President and Chief Executive Officer repaid
   $527,728 against these loans leaving an outstanding balance of $627,728
   inclusive of a loan of $252,728, which originated in August 1999. The
   Company's President and Chief Executive Officer has pledged various personal
   assets including vested options to purchase the Company's stock, shares of
   the Company's Common Stock, personal real estate assets and various
   securities against these loans. The Company recorded a provision of $350,000
   for bad debt expense against these loans in the fourth quarter of 2000 for
   the amount of the loans that exceeds the estimated realizable value.

   In March 2001, the Company and its President and Chief Executive Officer
   entered into a new loan arrangement which consolidated the outstanding
   balance for all previous loans and provided for a four-year payment schedule
   with a balloon payment due at the end of the term.

7. Restructuring and Other Charges

   In January 2001, the Company sold its subsidiary, Chengdu DSET Science and
   Technology Co., Ltd. In accordance with Statement of Financial Accounting
   Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and
   for Long-Lived Assets to Be Disposed Of", the Company recorded a pre-tax
   charge of $278,500 in the fourth fiscal quarter of 2000 against the remaining
   investment in the subsidiary.

   In March 2001, the Company deemed it necessary to reduce the workforce in the
   United States and to close its Canadian subsidiary due to the changing and
   unpredictable conditions in the marketplace, the discontinuance of product
   lines and in an effort to conserve cash. The Company recorded an impairment
   charge of approximately $2.2 million in the first quarter of 2001 for the
   carrying value of the Daleen license in the Canadian market.

   The approximate restructuring charges are summarized as follows:

<TABLE>
     <S>                                                                 <C>
         Daleen software license asset impairment                              $2,174,000

         DSET USA and DSET Canada Inc. - work force reduction                     378,000

         DSET USA and DSET Canada Inc. - asset impairments and future
         lease payments                                                           847,000

         Other                                                                     30,000
                                                                               ----------
         Total First Quarter 2001 Restructuring and other charges              $3,429,000
                                                                               ==========
</TABLE>

   The amount paid relating to this restructuring and other charges was
   approximately $533,000 for the quarter ended March 31, 2001.


                                       12



<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations.

General

         DSET is a leading provider of software solutions and services
principally for the North American telecommunications marketplace. The DSET
suite of electronic-bonding gateways interconnects the operations support
systems ("OSSs") of competing telecommunications service providers ("CSPs"),
with the OSSs of incumbent local exchange carriers ("ILECs") and other trading
partners that must trade information and share network capabilities to serve
customers. The US Federal Telecommunications Act of 1996 encourages competition
among providers of local phone services by requiring ILECs to allow new CSPs to
access the ILEC's OSSs and lease portions of their networks. Hundreds of CSPs
are vying to win customers from the ILECs by offering better pricing and
service. With DSET solutions, CSPs can build trading partner networks that
assist "provisioning" or "service-fulfillment" of phone service for new
customers in days rather than weeks. In addition, DSET solutions help CSPs
maintain a higher level of quality of service for their existing customers.

         Historically, the Company focused on the creation of applications that
could be distributed among many processors in order to solve highly complex
problems in the network management arena. These applications are predominantly
sold to network equipment vendors, both domestically and internationally. Until
1999, substantially all the Company's revenues had been derived from application
development tools and applications or services based on Telecommunications
Management Network ("TMN") standards. At the end of 2000, the Company decided to
exit its product lines in application development tools and local service
management systems due to the expenses and the shrinking revenue base associated
with them.

         During fiscal 2000, the Company recorded a pre-tax restructuring charge
of $601,600 for a headcount reduction of 71 employees and other costs associated
with the consolidation of our development centers into two rather than three
facilities. These restructuring actions occurred in the Company's fourth fiscal
quarter and were taken to align the Company's cost structure with the prevailing
market conditions.

         In January 2001, the Company sold its subsidiary, Chengdu DSET Science
and Technology Co., Ltd. In accordance with Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of", the Company recorded a pre-tax charge of
$278,500 in the fourth fiscal quarter of 2000 against the remaining investment
in the subsidiary.

         In March 2001, the Company deemed it necessary to have an additional
workforce reduction in the United States and to close its Canadian subsidiary
due to the changing and unpredictable conditions in the marketplace, the
discontinuance of certain product lines and in an effort to conserve cash. The
Company recorded an impairment charge of approximately $2.2 million in the first
quarter of 2001 for the carrying value of certain licenses related to the
Canadian market. Headcount was reduced by 47 employees in the United States and
Canada.


                                       13








<PAGE>


Charges relating to severance, lease payments and facility closure were
approximately $1.2 million. The Company may be required to reduce its expenses
in the future which may result in additional charges.

         The Company's return to profitability will depend on the market for OSS
interconnection products and services. The CSPs have experienced a decrease in
funding due to, among other factors, concerns over their business models. This
decrease in funding has forced CSPs to stop spending on many capital projects,
including DSET gateways. Many of the Company's targeted customers have already
purchased billing and order management systems but have decided to delay their
purchases of gateways until the funding climate improves and the order flow from
their customers increases. These purchasing delays not only occurred at large
well-funded CSPs, but also at start-up CSPs. This funding crisis also affected
the Company's collection efforts since many customers experienced financial
difficulties and were unable to pay the Company. While the Company believes that
it has adequately reserved for doubtful accounts, no assurance can be made that
no additional customers will be unable to pay or go bankrupt.

         For the quarters ended March 31, 2001 and 2000, the Company derived
approximately 44.5% and 69.8%, respectively, of its total revenues from license
revenues and approximately 55.5% and 30.2%, respectively, of its total revenues
from service revenues. During the first quarter of 2001, revenues generated from
CSPs were approximately $2.8 million and revenues generated from network
equipment vendors for local number portability ("LNP") solutions, application
development tools and related services were approximately $600,000. During the
first quarter of 2000 revenues generated from CSPs were $7.0 million and
revenues generated from network equipment vendors were approximately $4.6
million.

         DSET's license revenues from CSPs are derived from the sale of
electronic-bonding gateways to CSPs under contracts that provide for license
fees. Prices for licenses of the CSPs' products range from $115,000 to $500,000.
The total price of a license sale to a customer depends on the number of
licensed products and the number of trading partners. License revenues are
derived from the sale of LNP solutions and application development tools to
customers under contracts that generally provide for license fees and run-time
royalty fees. Prices for development licenses of the Company's LNP solutions and
application development tool suites can range from approximately $150,000 to
$400,000, depending on the number of licensed components and development users.
The Company's license agreements for application development tools also
typically provide for run-time royalty fees that are earned at the time of
deployment by equipment vendors to telecommunications carriers of network
devices that have embedded applications built with the Company's software. A
run-time license permits an equipment vendor to incorporate applications
developed with the Company's software tools in such vendor's telecommunications
network devices. License revenues from development licenses are recognized at
the time the product is shipped to the customer. Run-time royalty fees are
recognized as the Company is notified of such deployment. Notification is
typically received from customers pursuant to quarterly reports or via purchase
orders for individual licenses.


                                       14








<PAGE>


         The Company's service revenues are comprised of fees derived from
custom application development products and services, maintenance fees,
installation and training fees and other revenues generated from customer
support services. The Company's application development services are generally
individually negotiated and contracted for on a fixed price basis. Prices for
such projects vary depending upon the size and scope of the project and
estimated time and effort to completion. Revenues from application development
services are generally recognized on a percentage of completion basis calculated
as direct labor costs are incurred in relation to estimated total costs at
completion for each project. The impact of revisions in percentage of completion
estimates is reflected in the period in which the revisions are made.
Maintenance services, for which the Company typically charges between 15% and
30% annually of the price of the products licensed by the customer, may be
purchased at the customer's option. Maintenance fees are recognized as service
revenue over the term of the maintenance period, which is typically a 12-month
term.

         The Company had one customer accounting for 37% of revenues for the
quarter ended March 31, 2001 and one customer, which accounted for 20% of
revenues for the quarter ended March 31, 2000. The Company had one customer
accounting for 14% of accounts receivable, net at March 31, 2001 and one
customer accounting for 23% of accounts receivable, net at December 31, 2000.
The Company anticipates that its results of operations in any given period will
continue to depend to a significant extent upon sales to a small number of
customers. In addition, the Company anticipates that its results of operations
in any given period will also continue to depend on its customers' cash flow and
ability to obtain external financing. As a result of this customer concentration
and the uncertainty in the Company's financing, the Company's revenues from
quarter to quarter, financial condition and results of operations may be subject
to substantial period-to-period fluctuations.


         The Company's costs of license revenues consist primarily of royalties
paid to third party software companies and the amortization of acquired
technology and capitalized software development costs. The Company generally is
not contractually obligated to make minimum royalty payments. Costs of service
revenues include primarily payroll, related benefit costs, personnel and other
operating expenses. Sales and marketing expenses consist of salaries,
commissions and bonuses paid to sales and marketing personnel, as well as travel
and promotional expenses. Research and product development expenses encompass
primarily software engineering personnel costs, costs of third-party equipment,
costs associated with customer satisfaction and quality and software utilized
for development purposes. Research and product development expenses are charged
to operations as such costs are incurred. The Company's research and development
projects are evaluated for technological feasibility in order to determine
whether they meet capitalization requirements. General and administrative
expenses are comprised of personnel costs and occupancy costs for
administrative, executive and finance personnel.

         During the year ended December 31, 1997, deferred stock compensation of
$876,000 was recorded for options granted. This amount has been amortized to
compensation expense over the


                                       15








<PAGE>


vesting period of the options (two to four years). At March 31, 2001, the
remaining unamortized deferred stock compensation balance was approximately
$41,000.

         The Company primarily markets and sells its products and services
through a direct sales force in North America.

         The Company derives a portion of its revenues from international sales,
which constituted approximately 1% and 6% of the Company's total revenues in the
first quarter of 2001 and 2000, respectively. International sales are derived
from Europe (primarily Italy and Germany), and Asia (primarily Korea, China and
Japan). The Company's international sales currently are United States
dollar-denominated. As a result, an increase in the value of the United States
dollar relative to foreign currencies could make the Company's products and
services less competitive in international markets.

Forward-Looking Statements

         Statements contained in this Form 10-Q that are not based on historical
fact are "forward-looking statements" within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking statements may be
identified by the use of forward-looking terminology such as "may," "will,"
"should," "expect," "estimate," "anticipate," "continue," or similar terms,
variations of such terms or the negative of those terms. Such forward-looking
statements involve risks and uncertainties, including, but not limited to: (i)
the substantial variability of the Company's quarterly operating results, (ii)
the Company's dependence on the rapidly evolving telecommunications industry,
(iii) rapid technological change in the Company's industry, (iv) uncertainty in
the Company's customers' cash flow and external financing environment, (v) the
limited number of customers for a significant portion of the Company's revenue,
(vi) risks associated with market acceptance of the Company's new OSS gateways
interconnection and LNP products, (vii) risks associated with intense
competition in the industry, including competition for qualified technical
personnel, (viii) the buying patterns of the telecommunications providers, (ix)
the ongoing risk of that telecommunications providers will not get expected
funding to advance their business model and (x) risks associated with
acquisitions of businesses by the Company, including risks relating to
unanticipated liabilities or expenses or lower than expected revenues of such
acquired businesses. The success of the Company depends to a large degree upon
increased demand by Telecom Service Providers for its new OSS Interconnection
products and by network equipment vendors for its LNP products. As a result of
such risks and others expressed from time to time in the Company's filings with
the Securities and Exchange Commission, the Company's actual results may differ
materially from the results discussed in or implied by the forward-looking
statements contained herein.

Results of Operations

Three Months Ended March 31, 2001 Compared to the Three Months Ended
March 31, 2000


                                       16








<PAGE>


         Revenues. Total revenues decreased by 70.6% to $3.4 million in the
first quarter of 2001 from $11.6 million in the first quarter of 2000. License
revenues decreased by 81.2% to $1.5 million in the first quarter of 2001 from
$8.1 million in the first quarter of 2000. This decrease was attributable to a
reduction in orders from customers due to financing issues of prospective
customers. Service revenues decreased 45.9% to $1.9 million in the first quarter
of 2001 from $3.5 million in the first quarter of 2000. This decrease was
primarily attributable to less percentage of completion revenue recorded for
custom carrier and network projects. Revenues recorded using the percentage of
completion method of contract accounting amounted to $41,000 in the first
quarter of 2001 as compared to $2.4 million in the first quarter of 2000.

         Gross profit. The Company's gross profit decreased 89.2% to $923,000
in the first quarter of 2001 from $8.6 million in the first quarter of 2000.
Gross profit percentage for license revenues decreased to 67.0% in the first
quarter of 2001 from 90.1% in the first quarter of 2000 due to a lower sales
volume and amortization of acquired technology and capitalized software
development costs. Gross profit percentage for service revenues decreased to
-5.1% in the first quarter of 2001 from 36.2% in the first quarter of 2000. The
decrease in gross profit percentages was primarily attributable to lower sales
as there are fixed expenses within cost of goods sold.

         Sales and marketing expenses. Sales and marketing expenses decreased
3.1% to $2.5 million in the first quarter of 2001 from $2.6 million in the first
quarter of 2000. The decrease in sales and marketing expenses was primarily
attributable to lower commission expense offset in part by expenses relating to
increased personnel and related costs resulting from the increase in the
Company's sales and marketing force.

         Research and product development expenses. Research and product
development expenses increased 14.4% to $3.9 million in the first quarter of
2001 from $3.4 million in the first quarter of 2000. The increase in research
and product development expenses was due primarily to expansion in the number of
new products under development and expenses relating to increase in personnel.
In March 2001 an expense reduction plan was put in place, but the substantial
effect of these actions will not be realized until the second quarter of 2001.

         General and administrative expenses. General and administrative
expenses increased 43.0% to $1.9 million in the first quarter of 2001 from $1.3
million in the first quarter of 2000. The increase in general and administrative
expenses was due primarily to occupancy, information technology personnel and
additional professional fees. Due to the relocation of personnel to our Plano
office, administrative departments have had to absorb a larger portion of the
facilities costs of the Bridgewater facility.

         Bad debt expense. Bad debt expense increased to approximately $440,000
in the first quarter of 2001 from approximately $99,000 in the first quarter of
2000. The increase was due in part to the uncertainty in the cash flow and
external financing for CSPs which continued to impact the Company's ability to
collect its receivables.

         Restructuring and other charges. Restructuring and other chargers in
the first quarter of 2001 were $3.4 million including an impairment charge of
$2.2 million for the carrying value of


                                       17








<PAGE>


certain licenses related to the Canadian market and $1.2 million in charges
related to severance related to the March 2001 reduction in force and charges
related to the facility closure in Canada.

         Amortization of goodwill. Amortization expense decreased to
approximately $100,000 in the first quarter of 2001 as compared to $103,000 in
the first quarter of 2000.

         Interest expense and other income (expense). Interest expense and other
income and expense decreased to $47,000 for the first quarter of 2001 from
$55,000 for the first quarter of 2000 due to lower principal balances.

         Interest income. Interest income increased to approximately $490,000 in
the first quarter of 2001 as compared to approximately $398,000 in the first
quarter of 2000. This increase was due primarily to the recognition of gains and
losses on redemption of bonds and other securities.

         Income taxes. The Company's effective tax rate was approximately 0.3%
and 33.3% for the first quarter of 2001 and 2000, respectively. The 2001 rate
differs substantially from the statutory rate due to a valuation allowance of
approximately $3.7 million against the deferred tax assets. In making this
assessment, the Company considered the unpredictability of customers' funding
and purchasing decisions. In the first quarter of 2000, the tax provision on the
current period reflects an effective tax rate lower than the statutory tax rate
due to state income taxes offset by utilization of research and development and
foreign tax credits.

Liquidity and Capital Resources

         Since its inception in 1989, the Company has financed its operations
primarily through cash generated by operations and cash raised through its March
1998 initial public offering. At March 31, 2001, the Company's cash, cash
equivalents and marketable securities aggregated approximately $26.1 million, of
which cash and cash equivalents aggregated approximately $6.4 million and
marketable securities aggregated approximately $19.7 million. Marketable
securities at March 31, 2001 were comprised of fixed income government
securities and corporate bonds. The Company's working capital was $26.4 million
and $35.3 million at March 31, 2001 and December 31, 2000, respectively.

         Accounts receivable, net, decreased to $4.9 million at March 31, 2001
from $6.2 million at December 31, 2000, primarily as a result of decreased
quarterly sales, and an increase in allowance for doubtful accounts. Included in
accounts receivable at March 31, 2001 was $15.3 million for trade receivables
and $2.6 million for unbilled project revenue as compared to $16.1 million for
trade receivables and $2.9 million for unbilled project revenue at
December 31, 2000. The allowance for doubtful accounts was $12.7 million at
March 31, 2001 as compared to $12.3 million at December 31, 2000. Unbilled
project revenue is the excess amount of revenue recognized through percentage of
completion that has not been billed to the customer. Payment terms to customers
are generally net zero to net ninety days.


                                       18








<PAGE>


         The Company bills its foreign customers in U.S. dollars at agreed-upon
contractual terms. Accounts receivable at March 31, 2001 includes approximately
$381,000 from foreign customers.

         The Company's capital expenditures were approximately $604,000 and $1.0
million for the three months ended March 31, 2001 and 2000, respectively.

         In June 1999, the Company entered into a five-year capital lease
agreement at an annual interest rate of 8.21% for equipment, furniture and
fixtures at its new office facilities. Assets recorded under this lease are
included in fixed assets. Annual lease payments approximate $180,000.

         During August 2000, the Company renewed an unsecured revolving credit
facility with a bank pursuant to which the Company may borrow up to a maximum of
$5.0 million. Borrowings under this line of credit bear interest at the bank's
prime rate less 0.25% on aggregate principal amounts outstanding of less than
$1.0 million and at the bank's prime rate for aggregate principal amounts
exceeding $1.0 million. No borrowings under this line were outstanding as of
March 31, 2001. This credit facility contains, among other provisions, covenants
which: (i) mandate the amount of working capital the Company must maintain at
the end of each calendar quarter; and (ii) restrict the Company's ability to pay
cash dividends. The unsecured revolving credit facility expires on August 5,
2004. At March 31, 2001 and December 31, 2000 the "earnings before income taxes,
depreciation and amortization" ("EBITDA") covenant was not met. The Company has
applied for a waiver of this covenant.

         The net proceeds received by the Company upon the consummation of its
initial public offering in March 1998, pending specific application, were
invested in short-term, investment-grade, interest-bearing instruments and have
been used to finance operations.

         The Company believes that its existing available cash and marketable
securities, its revolving credit facility and the cash flow expected to be
generated from operations will be adequate to satisfy its current and planned
operations for at least the next 12 months. There can be no assurance, however,
that the Company will not require additional financing prior to such time to
fund its operations or possible acquisitions.

         European Monetary Union

         On January 1, 1999, eleven of the fifteen member countries of the
European Union set fixed conversion rates between their existing currencies and
the euro. At such time, these participating countries adopted the euro as their
common legal currency. The eleven participating countries now issue sovereign
debt exclusively in euros and will redenominate outstanding sovereign debt. The
legacy currencies will continue to be used as legal tender through January 1,
2002, at which point the legacy currencies will be canceled and euro bills and
coins will be used for cash transactions in the participating countries.


                                       19






<PAGE>


         The Company does not denominate its international revenues in foreign
currencies. The Company currently does not believe that the euro conversion will
have a material impact on the Company's results of operations or financial
condition.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

         The Company believes that it is not subject to a material impact to its
financial position or results of operations relating to market risk associated
with foreign currency rates or derivative securities.

         The Company believes the market risk exposure with regard to marketable
securities held in the investment portfolio is limited to changes in quoted
market prices for such securities. Based upon the composition of the Company's
marketable securities at March 31, 2001, the Company does not believe an adverse
change in quoted market prices would be material to its results of operations.



                                     20






<PAGE>



                           PART II. OTHER INFORMATION

Item 2. Use of Proceeds

         Use of Proceeds from Initial Public Offering

         On March 12, 1998, the Commission declared effective the Company's
Registration Statement (Registration Statement No. 333-43827) as filed with the
Commission in connection with the Company's initial public offering of Common
Stock, which was managed by BT Alex. Brown Incorporated, BancAmerica Robertson
Stephens and SoundView Financial Group, Inc. Pursuant to such Registration
Statement, the Company registered and sold an aggregate of 2,500,000 shares of
its Common Stock, for a gross aggregate offering price of $40.0 million. The
Company incurred underwriting discounts and commissions of approximately $2.8
million. In connection with such offering, the Company incurred total expenses
of approximately $1.1 million. As of March 31, 2001, the remainder of the $36.1
million in net proceeds received by the Company upon consummation of such
offering, pending specific application, were invested in short-term,
investment-grade, interest-bearing instruments and have been used to finance
operations.

         On January 25, 1999, DSET Acquisition Corp., a wholly-owned subsidiary
of the Company consummated the acquisition of certain assets of NPL. The
purchase price consisted of $2.5 million payable in cash to NPL and professional
fees of $158,000. NPL provided specialized software to CSPs.

         On September 30, 1999, the Company purchased Konark and related
technologies for approximately $3.3 million in cash and certain deferred
payments plus professional fees and the related deferred tax liabilities. Konark
provided software which enabled CSPs to rapidly activate new services for their
customers.

         In June 2000 and July 2000, the Company purchased exclusive worldwide
licenses for various products from Daleen Technologies, Inc. for $2.5 million
payable in cash. A royalty will also be due based on future sales. Subsequently,
in March 2001, due to changing and unpredictable conditions in the marketplace
and in an effort to conserve cash, the Company decided to abandon this product
line and recorded an impairment charge of approximately $2.2 million for the
carrying value of this license.

         For working capital restrictions and limitations on the payment of
dividends, see "Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."



                                       21






<PAGE>


Item 5. Other Information.

Item 6. Exhibits and Reports on Form 8-K.

<TABLE>
<S>     <C>
   (a)   Exhibits.
         None.

   (b)   Reports on Form 8-K.

         No Reports on Form 8-K were filed during the quarter for which this
         report on Form 10-Q is filed.
</TABLE>



                                       22






<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                        DSET CORPORATION

DATE: May 15, 2001                      By: /s/ William P. McHale, Jr.
                                            -----------------------------------
                                            William P. McHale, Jr., President
                                            and Chief Executive Officer
                                            (Principal Executive Officer)


DATE: May 15, 2001                      By: /s/ Bruce M. Crowell
                                            -----------------------------------
                                            Bruce M. Crowell
                                            Vice President and Chief Financial
                                            Officer
                                            (Principal Financial and Accounting
                                            Officer)



                                       23